The legal battle between Ripple Labs and the United States Securities and Exchange Commission (SEC) has taken a new turn, with recent developments raising doubts about the possibility of a near-term settlement. This shift comes in the wake of a legal challenge filed by Kraken, a leading cryptocurrency exchange, against the SEC.
Kraken Leverages Ripple Case
Bill Morgan, a pro-crypto lawyer, believes that Kraken’s lawsuit significantly impacts the likelihood of a settlement between Ripple and the SEC due to Kraken’s strategic use of Judge Torres’s ruling on programmatic sales in its defense.
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The exchange argues that this tactic demonstrates a strong incentive for the SEC to appeal Judge Torres’s decision. Consequently, Morgan views a settlement as improbable in the immediate future, potentially disappointing XRP holders.
The manner in which Kraken uses the finding of Judge Torres on programmatic sales in the summary judgment decision in its own motion to dismiss shows why the SEC will be strongly motivated to appeal Judge Torres’ decision. It is why a settlement of the SEC v Ripple case seems so… https://t.co/n1uYaOlh1d
— bill morgan (@Belisarius2020) February 23, 2024
Core Arguments of Kraken’s Legal Challenge
Earlier, Morgan shed light on Kraken’s legal approach, emphasizing its focus on the absence of a concrete relationship between issuers and buyers of XRP. This argument aligns with Judge Torres’ findings in the Ripple case. Morgan further clarified that Kraken’s position is that securities inherently involve a specific relationship between an issuer and a buyer.
He pointed out that the SEC failed to establish any relationship between the issuers of tokens designated as “crypto asset securities,” like Algorand (ALGO), Cardano (ADA), and Polygon (MATIC), sold on the Kraken exchange, and Kraken’s customers.
There are also similarities in these cases when you consider expectations of profits. Kraken’s motion asserts that the SEC’s allegations are inadequate to establish a reasonable expectation of profits derived from the issuers’ efforts. This argument, grounded in Judge Torres’ rulings, presents another obstacle for the SEC in its pursuit of a settlement.
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Kraken’s Challenge Raises Questions About Settlement With Ripple
Kraken’s recent filing underscores the absence of a direct link between issuer and buyer as a core defense tactic. By meticulously examining the SEC’s accusations against Ripple, Kraken aims to undermine the SEC’s claims regarding investors’ anticipated profits based on issuer efforts.
According to Morgan, Kraken exchange is a “blind bid/ask,” which mirrors the programmatic XRP sales that Judge Torres determined were not securities offerings. He also pointed out that some of those programmatic sales occurred on the Kraken exchange.
Read Also: Congressman Says Now Is A Great Time To Fire SEC Chair Following Pro-XRP Lawyer’s Critique
Due to this, he believes the SEC cannot let Judge Torres’s decision stand, and must appeal it to make headway in the case against Kraken. Morgan described this as a “Massive impediment to a settlement of the SEC v Ripple case.”
With Ripple and XRP making significant strides in Europe and other parts of the world, Kraken’s challenge raises concerns about the SEC’s approach to regulating digital assets, highlighting the need for clearer regulatory frameworks in the U.S.
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